Israel army radio reported Sunday that the Israeli cabinet plans to allocate $250 million over the next two years for settlements in the West Bank, despite US pressure to freeze all settlement activity.

The expenditure is part of the 2009-2010 state budget, which passed its first reading in the Knesset (Israeli parliament) last week. Half of the money is to be used for security expenses while the remaining half is to be used for housing construction. Opposition to the planned spending has already come from Peace Now, an Israeli anti-settlement watchdog, among other groups both in Israel and abroad.

Israeli Prime Minister Benjamin Netanyahu has rejected calls from the US to end all settlement activity, saying that existing settlements will continue their natural growth. Israel’s 2009-2010 $159 billion budget must pass two more readings in the Knesset before it becomes official.